FICO® Scores and Mortgage Underwriting Decisions
FICO® scores play an important role in mortgage underwriting decisions. Lenders have discovered a definite relationship between credit scoring and mortgage delinquencies. Clearly half of the borrowers with FICOŽ scores below 550 became ninety days delinquent at least once during their mortgage term. On the other hand, only one in every 5,000 borrowers with FICO® scores above eight hundred became delinquent.
There are compensating factors that will make an underwriter more lenient toward lower FICO® scores. These could be:
Much larger down payment,
Very low debt-to-income ratios,
An excellent history of saving money,
There also may be a reasonable explanation for items on the credit history which negatively impact your credit score.
Loan processors will typically request reports and credit risk scores from at least two of the three major credit bureaus. The better your reports, the better you'll score, and the easier it will be to a mortgage loan with good rates and terms.
Never apply for a loan without knowing what each of the three bureaus will report on you. Remember, FICO® scores play an important role in mortgage underwriting decisions. You may want to get ahead of the problem by starting credit repair before submitting any applications.
Others who have viewed this page also viewed these pages:
FICO® Score - What's in Your FICO® Score?
Online Credit Scores Often Differ From FICO® Scores - Why there is often a difference between online and FICO® credit scores.
FICO® - What is a FICO® credit score?
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